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South African consumers expect tough times ahead

South African professionals expect the inflation rate to increase and interest rates to rise in 2016.

This is part of the results obtained from the fifth comprehensive South African inflation survey among the members of the Professional Provident Society (PPS), a registered financial service provider, which was done by Professor Jannie Rossouw, head of school of the Wits School of Economic and Business Sciences (SEBS), and PPS.

The survey showed that 80 per cent of the 4 100 respondents expect an acceleration of the inflation rate during 2016.

"The implications are clear: Professional South Africans expect higher inflation next year and higher inflation will push up interest rates," said Rossouw.

The survey questions were distributed on 26 November 2015 and 4 100 responses was received. Respondents were asked to respond to two questions:

The first question asked respondents to indicate whether they believe that historic inflation in South Africa was accurately recorded. As is evident from the Figure, 72 per cent of respondents do not believe historic inflation figures. Their perception is that prices increase more rapidly or much more rapidly than the rate of inflation.​

In response to the second question, respondents had to state their expectation of future inflation. As is shown below, 80 per cent of respondents expect an acceleration in inflation during 2016.​

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"The research data shows that historic inflation figures lack credibility," says Rossouw. "People simply do not trust the historic figures as they perceive prices to general to increase more rapidly than the price increases reported by the official inflation rate. At the same time, inflation is expected to accelerate next year".

"PPS included the survey questions in its quarterly survey among South African professionals and will continue to do so in future," says Gerhard Joubert of PPS. "PPS is excited about this opportunity to continue its collaboration with the SEBS at Wits."

The quarterly survey is distributed electronically among PPS members and forms part of a broader survey on perceptions and impressions undertaken by PPS. The survey is completed electronically by PPS members and is therefore free from any enumerator bias of influence.

RESULTS SUMMARY

The PCI was distributed to PPS members on 26 November 2015 and have received 4 100 responses.

Question 1​

Over the past five years, prices increased by on average 5.5 per cent per year. During 2014, prices increased by 6.1 per cent. In your view by how much did prices increase during the past 12 months?

Question 2

By how much do you expect prices in general to increase during the next 12 months?